Nifty Outlook for 20th December 2011

Yesterday, NIFTY made a Bullish Hammer Candlestick Pattern. This formation suggests that the previous bearish sentiment is causing the short traders to feel increasingly uneasier with their bearish positions. This formation requires confirmation of the implied trend reversal by a white candlestick, a large gap up or a higher close on the next trading day. NIFTY had a weak opening with almost 25-30 points in the negative territory. Heavy selling in the broader markets was witnessed with Stocks dumping almost 10-20% with great volumes, due to which NIFTY marked a low of 4555.90 for the day and could not made a move above the levels of 4600. BANKING & FINANCE and REALTY & INFRA were the major culprits of this panic selloff. NIFTY dipped to the 28-Months Low level. A very sluggish movement was witnessed till the last trading hour of the day. NIFTY reverted form the day’s low level and moved slowly and till the levels of 4600 and finally it maintained above it and marked a high of 4623.15 for the day. CAPITAL GOODS, POWER and METAL were the other sectors which were the laggards for the day. NIFTY finally ended at 4613.10, just above the important physiological level of 4600.

Technically, a Negative Crossover between 200-Days SMA (Simple Moving Average) and 50-Days SMA is still intact. Even a Negative Crossover between the 50-Days SMA and 20-Days EMA has developed since, which signals selling pressure to creep in coming trading sessions. NIFTY has again dipped below its 20-Days EMA and 50-Days SMA on the closing basis. A Fibonnaci Retracement Level is being drawn from the High of 6338.50 (08^th November, 2010) to the 28-Months Low marked 4555.90 by NIFTY (20^th December, 2011). Still the investors should wait for fruitful results ahead and stay away from the markets. With deteriorating International Economic Scenario NIFTY even breached its important support level of 4650 on closing basis, which was till now acting as a good support level. Now, the level of 4800 is the immediate resistance for NIFTY on Closing Basis. Investors are suggested to avoid the markets to invest at this time; however, traders are suggested to take the advantage of Swing Trading, which will appear many times in between.   

On the Economic Front, JAPAN will be coming out with its All Industry Activity Index, Coincident Index, and Leading Economic Index for the month of October and Merchandise Trade Balance for the month of November. Nationwide Consumer Confidence for the month of November, Gfk Consumer Confidence and CBI Distributive Trades Survey for the month of December will be announced in UK. GERMANY will be announcing its Producer Price Index for the month of November, IFO – Expectations, IFO – Current Assessment for the month of December and Gfk Consumer Confidence Survey for the month of January. Building Permits and Housing Starts for the month of November will be announced in US.

Weakening Rupee, Deteriorating European Economy Conditions, Uncertainties in Indian Corporate and Finance Scenario are acting as major triggers of the massive sell off, which is resulting in development of Fear among the Indian and International Investors. Traders are suggested to trade cautiously by following Strict Stop Losses and Booking Fast Profits, whereas, Investors are suggested to stay from the markets right now, as market will give better chances ahead for Bottom Fishing and earning handsome returns thereafter.

NIFTY is again trading below all its moving averages. The 200-Days SMA (Simple Moving Average), 50-Days SMA and 20-Days EMA (Exponential Moving Average) is at 5313.71, 4992.30 and 4844.24, respectively. The 14-Days RSI (Relative Strength Index) and 26-Days MACD (Moving Average Convergence and Divergence) are now heading towards the oversold zone one again.

What does Indicators Say?

                                   

1. RSI (14 Days & 9 Days): The values are 33.28 and 39.55, respectively. The indicator is moving towards oversold zone from the overbought zone. 

2. MACD (26 Days & 12 Days): Their Values are 21.68 and 69.71, respectively. A short term negative crossover is indicated by both the Moving Averages.

3. +DI: 17.51, -DI: 33.34, ADX: 22.66: The Negative Directional Index has gained strength over the Positive Directional Index and the Average Directional Index is below 20, indicates that the market is in the trading range.

4. SMA (200 Days), SMA (50 Days) & EMA (20 Days): NIFTY is trading below the level of  200-Days SMA, but has crossed its 20-Days EMA and 50-Days SMA on closing basis. These indicators are at the levels of 5313.71, 4992.30 and 4844.24, respectively.

Some Trading Stats of the Monday’s (19^th December, 2011) Trading Session:

Net Selling of Rs. 450.37 Crore in Cash and of Rs. 1077.16 Crore in F&O Segment by FIIs was witnessed on Monday’s Trading Session.

Net Buying of Rs. 745.71 Crore and of Rs. 798.54 Crore was witnessed in Mutual Funds and Others Segment, whereas, Net Selling of Rs. 491.37 Crore was witnessed in Proprietory Trades.

In F&O Segment Net Buying of Rs. 10.22 Crore was witnessed in Stock Options, whereas, Net Selling of Rs. 1006.80 Crore, of Rs. 53.07 Crore and of Rs. 27.51 Crore was witnessed in Index Futures, Index Options and Stock Futures, respectively.

NIFTY DEC FUTURE ended at a Premium of 10.75 Points to the Spot NIFTY.

For the day, intraday resistance for NIFTY comes at 4650 / 4680 / 4720 levels. At the same time, 4580 / 4550 / 4520 will act as major intraday support levels.